Candidates lose hope of relief for ailing middle class

THE DWINDLING MIDDLE

June 27, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- The middle class appears to have had its moment. For a while there, it was everyone's political darling.

It was wooed in the White House. It won promises from Congress. It captured the imagination of most presidential candidates in the primaries. Now all, alas, has come to nought.

Even that most persistent of latter-day suitors, Democratic nominee-apparent Bill Clinton, seems to have lost some of his ardor. He has halved the tax break he originally offered the millions of middle-class voters whose support he would dearly love to have.

Timothy M. Smeeding, economist and project director of a long-term incomes study, said: "You can moan about the middle class or whatever, but to do something for them is very expensive."

Too expensive apparently for President Bush, members of Congress or Mr. Clinton. All have backed away from their earlier pledges to give the hard-pressed middle class a break this recession-racked election year.

To add insult to injury, not only are they now likely to be given less than they were led to expect, but there are fewer of them to complain about it, according to Mr. Smeeding, co-author of a study of middle-class trends over the past 20 years.

The middle class is not merely becoming less affluent: It is actually shrinking

"They are getting to be less politically important because they are getting smaller, aren't they?" said Mr. Smeeding, who defined the middle class as families with incomes of $20,000 to $60,000 in after-tax 1992 dollars.

At the beginning of the 1980s, the middle class represented 75 percent of the population. At the beginning of the 1990s, it was less than 65 percent, according to his analysis. The lower strata are dropping into poverty, and the wealthier are moving up to join the seriously rich.

"It's shrinking at both ends," said Mr. Smeeding, professor of economics and public administration with the Metropolitan Studies Program at Syracuse University in New York.

"There is something to make Republicans and Democrats both take notice. One thing you can conclude from my study is we ought to be happy the middle class is shrinking because people are moving up. But switch your political persuasion, and . . . more are falling out of the middle to the low. If you started in the middle in the 1980s, you had a bigger chance of falling down than of climbing up. That was not true in the 1970s and 1960s."

It was this reversal of prospects that prompted this year's political sympathy for the struggling middle class, caught in a financial squeeze of falling real incomes made worse by the recession.

Democrats on Capitol Hill opted for a tax credit against Social Security taxes, to be converted in 1994 to a permanent $300-a-child tax credit. President Bush, in his budget, proposed a $500 increase in the personal exemption for each child.

Both proposals are dead, killed by the cost of helping such a large group as the middle class and by the size of the federal deficit -- an estimated $400 billion this year.

Many economists warned that the country couldn't afford to give so many so much. It would either add to the deficit or be inflationary -- or both.

Mr. Clinton's explanation for drawing back is that there are fewer resources now available than appeared likely even last September, when the original tax break of an average $350 per middle-class family was introduced.

His Democratic primary opponent, Paul E. Tsongas, may have helped his conversion. Mr. Tsongas vehemently opposed a middle-class tax cut as "pandering" and made it clear that he thought Mr. Clinton was doing just that.

Mr. Clinton will now target his smaller tax break on middle-class families with children, said Ron Shapiro, economic adviser to the Clinton campaign.

But, Mr. Shapiro points out, he has not abandoned the rest of the middle class.

"The economic interests of middle-class Americans go beyond the tax burden," he said, pointing to the Clinton proposals for increasing investment to create jobs, introducing universal health care, offering free college tuition in return for two years' national service, and improving job training.

"Yes, we made hard choices. But the real story is that the way you help the middle class is not only by giving them a tax break but by giving them real opportunity, and that is at the center of this program," said Mr. Shapiro.

In the meantime, forget about a middle-class tax cut this year. As XTC William Lowther, a middle-class, self-employed writer in Columbia, observed: "Again, it's all promises, promises, promises. It would have been nice to get some help when we really need it."

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